Aadhaar - PAN linkage - teething troubles still exist..

Are you grappling with last-minute issues linking Aadhaar and your PAN? Small consolation - there are many like you.. read this article in The Hindu Business Line to find out more..

With July 31 deadline imminent, fixing name mismatches is proving arduous

COIMBATORE, JULY 26:  

For many, filing income-tax returns is a fairly taxing chore. Most often, it comes with the shock of realising that your auditor wants bills and documents that you have either thrown away or misplaced.

As the July 31 deadline for filing returns nears, many taxpayers are scrambling to prove background documents and information demanded of them.

Despite proclamations by the government that the tax-filing process has been simplified, this time around there is an extra hurdle to clear.

Many individual assessees are finding it difficult to link their Permanent Account Number (PAN) with their Aadhaar number, which is a new requirement of the I-T department.

There are many reasons for this. Krithika, a private firm executive, said, “My father’s name on the PAN card does not match the name on the Aadhaar card; the latter lists his name with his initials, while the former has the initial expanded. He passed away recently and we have surrendered his phone. When I contacted the income-tax office, they had no clue as to how to deal with the issue.”

Treating this as a one-off case, the tax authorities asked her to write to the office in Chennai. “But time is running out,” she says.

That, however, is not the end of her worries. “In my mother’s case, while the Aadhaar and PAN have been linked, the system asks for her Aadhaar enrolment number. She suffers from dementia and is bed-ridden,” says Krithika. “I am unable to file both their tax returns.”

Coimbatore-based auditor and founder of GKM Tax Advisors G Karthikeyan said he too faced a similar problem and was unable to link his PAN and his Aadhaar.

“Naming conventions differ across regions,” he pointed out. “In some places, people have surnames, but in the South, we prefix names with initials. When this is expanded in one identity card and left as such on the other, there is a mismatch.”

Until recently, he said, “most of us did not bother about these issues; after all, we do have both Aadhaar and PAN cards. I got mine and my parents’ cards regularised last week. There is a huge rush to get this sorted out.”

Matters get complicated if there has been a change in mobile phone numbers, as the one-time password to effect any name change would be sent to the registered mobile.

An employee in a software company said he was fed up with the whole system as he had to wait in queue to get the details regularised.

Karthikeyan acknowledged that linking PAN and Aadhaar was a good move, but wondered why the process was being hurried through. “In India, PAN has served to establish a person’s identity for years, and there is a verified database. The government should either go with it or consider giving more time, say three months, to enable genuine filers to comply with the law,” he reasoned.

(This article was published on July 26, 2017)

Business Line : Features / Mentor : Where there is a will…

Business Line : Features / Mentor : Where there is a will…

A will has legal acceptance, even if it is written plainly on white paper with no formal style, with just two witnesses.

March 18, 2012:  

It was during the recent visit to USA, that I came across a shocking situation. A middle-aged couple from Gujarat, who were relatives of my client, had recently passed away in a tragic car crash.

They had moved from India and settled in USA almost a decade ago for a software job, and both of their children are natural US-born citizens. The grandparents hurried to USA and took care of all formalities, including the funeral and last rites.

When the time came to claim the children and arrange for them to return to India, they were in for a shock — the US Government had placed the kids in foster care already.

Further enquiries revealed that only a court of law could decide if the children remained in foster care or went with the grandparents, because the parents hadn't written a will designating a guardian for the children, in the event of something happening to both of them.

The fact that the children lost both their parents in a horrifying accident was tragic enough, but making the matter worse was the fact that the parents died intestate, and thus, the custody of the children became an issue for the courts to decide.

Yes, sadly enough, if a person dies intestate in USA, and has young children, and the remaining parent is also deceased or unavailable, the courts will determine who gets custody of the children.

What a tragic situation for the children to be in! Coping with losing both parents is bad enough, without the added trauma of settling into a foster home and adjusting to an alien culture until the court can make up its mind on where they should go, and who should care for them.

LEGAL DECLARATION

Undoubtedly, social systems differ from country to country. Foster care is a common procedure in USA, but alien to Indian culture. While we aren't judging the correctness of foreign social rules, one cannot help thinking that a simple thing like a will could have made a lot of difference to those kids. Eventually, the court did grant the grandparents' custody of those children, with the intervention of the Indian Embassy, but a will could have prevented a long wait, and astronomical legal expenses.

A will is a simple enough legal declaration, by which a person provides for the transfer of his/her property at death. Perhaps, because of its association with death, it is a document that most people postpone drawing up, especially in India.

Due to its association with death, it is considered inauspicious. However, not drawing up a will these days is more inauspicious. If someone dies intestate in India, something as simple as transfer of a phone line or an LPG connection requires that the nominee prove he/she is a legal heir of the deceased in addition to getting letters from the remaining legal heirs. People also desist from discussing this issue with their parents, in view of their sentiments and the inauspicious tag attached to a will.

ASSETS FOR THE FUTURE

Unless the older generation, for some reason, seeks professional advice and comes across a professional consultant who provides the right advice, they don't foresee such issues, and are, therefore, blissfully ignorant of them. In their belief that they are leaving assets for their children, and that they have provided for the prosperity of the family, they unknowingly leave behind many a legal tangle. A will has the legal acceptance, even if the Testator (who writes the will) writes on a white paper with no formal style, with two witnesses, and which is ambulatory & revocable during his lifetime to accommodate change of events such as birth, marriage, divorce, family chemistry, wealth variation etc.

‘Where there is a will there is a way' goes an old English adage. Someone made a witticism out of it and turned it around to state ‘Where there is a will… there are many worried relatives' To top it all, however, where there is no will… there are umpteen legal hassles.

(The author is a Coimbatore-based chartered accountant.)

Compliance aspects of inward remittance

Any company setting out to receive foreign share capital has to know what percentage of investment is allowed in that industry by the Government.

An auto component manufacturing company from Korea was on the lookout for a suitable joint venture partner to set up a facility in India that would logistically support supply to the car manufacturer in Chennai. After conducting due diligence, the Korean company identified Anish Southern Group companies as an ideal venture partner, with whom the procedures for incorporation were set in motion. The new joint venture company, comprising both Korean investors and Indian investors, was incorporated with the Registrar of Companies with 49 per cent of equity investment by the Indian investor, and 51 per cent investment from the Korean investor.

The company opened the bank account with a private sector new generation bank, through which the funds were routed from Korea to India, and the branch of the bank is an Authorised Dealer (AD) of RBI. The AD secured KYC documents on receipt of the inward remittance, but didn't follow up on some other FEMA-related requirements for foreign inward remittance. The company allotted shares to all investors, and complied with ROC formalities by filing Form 2. The initial focus was on operations, and meeting its orders and augmenting supply chains and logistics to further strengthen its hold on the market. During the first audit of the books of the company, the auditors sought FEMA compliance papers for verification of the foreign share holding. At this point, the JV Company realised that they had unintentionally missed out on this aspect of the deal.

SECTORAL CAPS

Whenever any company sets out to receive foreign share capital, certain essentials need to be verified. It needs to know what percentage of investment is allowed in that specific industry under the Government of India's FDI schemes, and one needs to verify that the industry doesn't fall into the list where the Government has set sectoral caps or limits on foreign investment. There are three such categories — where 100 per cent FDI is allowed, where sectoral caps exist, and last but not the least, where FDI is absolutely not allowed. Further, there are industries where investment is allowed via the automatic route — in other words, only information reports need to be filed with the Reserve Bank of India. In certain other cases, prior approval of the government is required, and must be secured from the Foreign Investment Promotion Board (FIPB), Government of India.

The JV Company, having received FDI under the automatic route, should have reported certain details on the Advance Reporting Form to the Regional Office of the Reserve Bank of India, within 30 days from the date of receipt of inward remittances. The report would include details of the receipt of remittance towards issue of equity instrument (viz. shares / fully convertible debentures / fully convertible preference shares), copies of the Foreign Inward Remittance Certificate (FIRC) evidencing the receipt of inward remittances, and Know Your Customer (KYC) report on the non-resident investors from the overseas bank remitting the amount.

ADVANCE REPORTING

The procedure may be classified into two stages. Stage 1 happens on the receipt of share application money, and should be completed within 30 days of receipt of remittance. Stage 2 is due when shares are allotted. At that time, the JV Company needs to file a report on form FC-GPR with the respective regional office of the Reserve Bank of India.

This report must be accompanied by certain certifications from the Company Secretary and Statutory Auditors of the JV Company. Another point to be noted is that all the reporting happens through the AD category 1 branch of the bank where the company has an account, and which receives the remittance of share capital. It is, therefore, imperative that the AD keeps its customers informed of FEMA requirements in such cases.

In this case, failure to report the transaction will invite penal provisions under FEMA. The JV Company would need to apply to RBI for compounding of contravention under FEMA. One can also make an application for compounding, suo moto, on becoming aware of the contravention. It would, of course, be better to follow reporting requirements, rather than invite penal provisions, as these types of irregularities will dominate the horizon when the foreign investor wants to repatriate dividends or capital on a later date.